Investment growth exceeds expectations

Investment growth exceeds expectations

Overall investment across Laos increased above the set plan by 24.2 percent in 2016, driven by the private sector and the greater availability of bank credit, according to the government’s latest report.

The government expected the mobilisation of 34.5 trillion kip last year but instead more than 42.85 trillion kip was invested, representing 33.1 percent of the Gross Domestic Product (GDP).
A senior economist at the National Economic Research Institute, DrLeeberLeebouapao told Vientiane Times yesterday that domestic and foreign private entrepreneurs represent more than half of the entire investment made.
“More money has also been injected into mega investment projects which have been approved by the government since last year,” he said.
DrLeeber said the government has allocated a huge amount of capital for the almost-US$6 billion railway project, linking Vientiane to the Chinese border.
In addition, several hydropower projects, shopping centres, hotels and industrial developments in special and specific economic zones have commenced construction, driving growth.
Minister of Planning and Investment DrSouphanhKeomixay told the ongoing National Assembly session on Tuesday that the government approved 1,222 investment projects last year worth more than US$3.13 billion (25.47 trillion kip).
However about US$2.9 billion (23.63 trillion kip) had been brought into Laos which was about 28 percent above the set plan.
One of the most significant features to note is that capital sourced from bank credit to fund investment reached 10.87 trillion kip which was considerably above the set plan of 6.7 trillion kip.
Economists attributed such to changes in the banking sector.
Last year, commercial banks in Laos lowered their interest rates for both deposits and loans in line with the decision made by the Bank of the Lao PDR, aiming to stimulate the economy and make financing more affordable for the business sector.
As a result, more money has been circulating in the Lao economy thereby stimulating business activity and contributing to further promotion of production for commercial purposes.
Despite revenue shortfalls last year, the government decided to carry out 5,355 State investment projects worth more than 3.29 trillion kip, equivalent to 99.6 percent of the annual plan.
The Official Development Assistance (ODA) that Laos received from donors last year was less than projected at some US$621.6 million (5.05 trillion kip), equal to 90.8 percent of the annual plan.
Last year the country’s economy grew at the rate of 7.02 percent which was less than the government’s expectation of 7.5 percent.
The slowdown in the growth rate has been attributed to various factors including the global economic slowdown that has affected Laos in various ways.
Declining demand around the world has driven down the price of commodities like mining ores and rubber, key exports that generate income for these sectors.

With a policy to develop the country from “landlocked to land-linked”, Laos is seeking to graduate from least developed country status in 2020.

vientiane times